Well done Indian Railways!

The provisions in the interim Budget presented on Friday reflect the robust revenue growth!

NEW DELHI: The railway revenues are beginning to turn. After failing to meet the Rs 1.8-trillion earnings mark in the past three years, the Railways are now moving closer to the Rs 2-trillion mark — way ahead of the Rs 1.78 trillion it earned last year. The surge is creditable.

The provisions in the interim Budget presented on Friday reflect the robust revenue growth. Indian Railways has, however, projected only a 95 per cent operating ratio. For the past few years, the railway’s wage bill has continued to be more than 60 per cent of its income. But even with digital modes of revenue collection, staff requirement will not come down since it provides services to 8.4 billion passengers annually.

Amtrak, the US railway managed by the federal government, also has a wage bill of 60 per cent of revenue.

Increasing fares is not the only way to improve revenues. The railway needs to target passenger volumes. Currently, the Indian Railways has a per-day ratio of 18 passengers per employee. A small increment, say two more passengers per employee, would add Rs 5,000 crore per annum to the Railways’ revenues. This is equal to a 10 per cent hike in fares. Railway container traffic is not growing too fast. This is an issue that the Railways will perhaps address from 2020.

The increase in capex was expected. Funding projects through borrowings is on the rise. Train 18 has cost about Rs 100 crore. Instead of spending for these from the exchequer, the government can take loans.